Feb 14, 2007 8:14 pm US/Central
2 Former Enron Traders Get Probation
SAN FRANCISCO (AP) ―
Two of three former Enron Corp. traders accused of driving up energy prices during California's power crisis were each sentenced Wednesday in federal court to two years of court-supervised release.
Timothy Belden, the former head of trading in Enron's Portland, Ore., office, was sentenced after pleading guilty in October 2002 to one count of conspiracy to commit wire fraud. Belden's plea was the first prosecution of anyone related to the West's energy crisis in 2000 and 2001. He had faced up to five years in prison and must forfeit $2.1 million.
The second defendant, Jeffrey Richter, was a lower-level trading manager in charge of the so-called "short-term desk" who also pleaded guilty to two counts related to manipulating energy prices. He had faced up to five years and agreed to pay a $410,000 fine.
A third trader, the alleged mastermind behind the scheme, is expected to be sentenced next month for his role in the scam that fraudulently sent California energy prices soaring, causing energy shortages and rolling blackouts.
Internal company memos describe how Belden's trading unit took power out of California at a time of rolling blackouts and shortages and sold it out of state to elude price caps, according to documents obtained by investigators.
Enron bought California power at cheap, capped prices, routed it outside the state, then sold it back into California at vastly inflated prices, authorities said. The sham trades were designed to circumvent the California-only price caps on wholesale energy.
The crisis played a role in Pacific Gas & Electric Co.'s bankruptcy and will leave California consumers paying abnormally high electricity prices for years.
Prosecutor Laurel Beeler said the government sought lenient sentences because of their "extraordinary assistance" in the investigation. Beeler said they gave hundreds of hours of their time to assist authorities at understanding the scheme, assisting authorities in the government's successful case against Enron Chairman Ken Lay, Chief Executive Jeff Skilling and dozens of others.
Beeler, however, said it was unclear how much the energy trading scheme cost ratepayers.
"Calculating a particular loss to that activity is difficult," she told U.S. District Judge Martin Jenkins.
The third defendant, John Forney, the manager of Enron's trading desk, pleaded guilty to one of 11 charges in exchange for his cooperation and is to set to be sentenced in March.
Forney pleaded guilty to wire fraud -- specifically, that he promised to supply energy Enron did not have and improperly collected electrical grid management fees for Enron.
(© 2007 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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